Corn
Corn futures are called 9 to 12 cents lower. Prices were limit down in the front months on Wednesday, with a major London bank dumping ag commodity positions aggressively. Liquidation selling extended to crude oil and gold overnight. Some of the other selling was attributed to end of quarter reallocation with Funds selling an estimated 30,000 contracts. Russia also sold feed wheat to Tunisia competing with exports for corn. Fundamental bulls point out that the rapid rise in hog and cattle prices has margins back in the black and solidifies feed use. Weekly ethanol production also rebounded last week to 901,000 bpd, showing that lower input costs can still ratchet up consumption of corn. The latest 6 to 10 day weather forecast is calling for above normal temperatures and normal to below normal rainfall over most of the corn and soybean belt until July 1st. Estimates for weekly Export Sales were 600,000 MT to 1.2 MMT. USDA put the actual number at 531,100 MT. Large South Korea n purchases occurred too late to make it into this report and will show up next week. Globex prices were down 9 to 11 cents overnight. Preliminary OI data shows a plunge of 18,389 contracts yesterday, with July shedding 27,905 and down to 262,538.
Soybeans
Soybean futures are expected to open 4 to 8 cents lower. Fundamental news this morning includes Stats Canada canola acreage, USDA weekly Export Sales and Census Crush. Estimates for Canadian canola acreage were down about 900,000 from the earlier estimate. Projected weekly export sales range from 150 to 400 thousand MT. Census Crush estimates averaged 127.56 million bushels for the crush, 407,600 short tons for meal and 3.326 billion pounds for soybean oil. The actual Census numbers are 128.03 million bushels crushed, soy meal stocks at 374,957 MT and soy oil stocks at 3.173 billion pounds. All three numbers are more bullish than the trade expectations. Weekly export sales were bearish, however, at a net 204,000 MT. Globex prices were down 1 to 2 1/2 cents.
Wheat
Wheat futures are called 3 to 5 cents lower. Russia has returned to the export market selling (or should we say giving away) feed wheat to Tunisia. Egypt has decided to wait for this year’s wheat to be harvested before buying Russian wheat because of quality concerns. Russia sold the feed wheat delivered to Tunisia for less money than it would cost FOB from the U.S. for corn. Wheat at the CBOT came with 3 cents of limit lower during the trading session but rallied sharply ahead of the close. Crop ratings are also improving in Europe. Toepfer raised projected German production to 23-23.5 MMT, a 200,000 MT improvement but still below last year. Estimates for the weekly export sales report ranged from 300 to 700 MT. USDA put the actual number at 661,300 MT, the upper end of the range. Globex futures were down 1 to 2 cents overnight. French wheat futures are fractionally higher this morning after plunging 7.5% yesterday in an overreaction to the Tunisian deal.
Cattle
Cattle futures are called 100 to 150 points lower and liquidation of a big bank position. They were lower on Tuesday after a sharp rally. The USDA Cold Storage Report showed an increase in beef supplies of 2 percent from last month. There was some minimal cash business to test the waters yesterday but not enough to set a market trend. There were 107 head sold in NE for $113, $1 to $2 higher than last week. Sales in KS were reported at $178 in the dressed on 40 head. Packer margins are very profitable so feedlots expect them to pay what the cattle are worth. Slaughter is running on pace with a year ago and boxed beef prices have been strong of late. Choice beef was $1.65 higher at $177.97 on Wednesday afternoon.
Hogs
Lean Hogs are expected to start the day session 100 to 125 points lower. Lean Hogs had recovered over 62 percent of the March/July price drop as of yesterday. The USDA Cold Storage report showed pork supplies were down 1 percent from last month and up 22 percent from last year. Pork Bellies in cold storage were up 6 percent over last month and 28 percent higher than last year. Cash hog prices were up $1.11 in IA/MN at $101.65. The WCB was $1.08 higher at $101.49 and the ECB hogs were $1.79 higher at $96.83. Slaughter is estimated at 400,000 head on par a week ago. The Lean Hog Index is at $95.72, up $1.17 yesterday. Estimates for Friday’s quarterly Hog and Pig report averaged 100.1% for All Hogs, 100.1 for Kept for Breeding, 100.1 for Market Hogs and 98.2 for Mar/May farrowings.
Cotton
Cotton is trading 90 lower to 400 higher, with shorts being squeezed a bit in the old crop July. Most ag commodities were lower yesterday due to fund related liquidation selling. The Fed will keep interest rates at near zero. Some areas of the economy are improving while other areas need to show improvement. The Fed will complete the rest of the $600 billion of the QE2 program and is in favor of the U.S. raising the debt limit. South Texas received rain but the Lubbock area has not yet. It will have to receive a significant amount to make an impact so that it doesn’t just evaporate. The Cotlook A forward index was at 140.55, down 40 cents/pound.
By Donna Hughes
Lone Star Portfolio Advisors, Inc. was founded by Donna Hughes. Donna began her career in the industry in 1978 after graduating High School as a member of the Chicago Mercantile Exchange’s Inspection and Delivery Department where she was responsible for scheduling and facilitating the USDA grading and delivery for various Exchange Commodities. After 1 ½ years, she was offered a position working with George Segal, a prominent hedger in the Pork Belly market. It was through this relationship that she was mentored and taught the hedging process by working with Mr. Segal as well as other leaders of the Pork Industry. In 2004, Donna moved to Texas where her skills in the industry were utilized to help individual and corporate producers with their Risk Management Goals. Her Daily Market Commentaries are heard on the AllAgNews.com Radio Network broadcasting throughout Texas. She also contributes to magazines and periodicals including PetroEvents and Ag Monthly.
Donna created Lone Star and implemented strategic relationships with Daniels Trading and R.J. O’Brien leveraging their services to enable Lone Star to Build Lasting Relationships Thru Information, Execution and Research.
